1 A R500 par value convertible preference share is selling at R520 If the conversion ratio is 20, what is the conversion price R19 R20 R25 R26 2 The voting system for common shares that gives minority shareholders the most representation on the board of directors is majority voting cumulative voting statutory voting proxy voting 3 Which of the following statements regarding deferred shares is not correct 3 A convertible preferred shares is priced at R100, with a conversion ratio of five If the common shares move to R25 per share, what would the preferred shareholders return be if they converted now 75 5 25 Cannot be determined from the information provided 4 The value of the convertible security can be expressed in terms of the common share into which the security can be converted It is equal to the conversion ratio times the current market price This is referred to as the premium over conversion value conversion ratio conversion price conversion value 5 Which one of the following statements related to common equity is correct Corporations are required to pay annual dividends to its shareholders Corporations have the right to discontinue paying dividends Common equity is a form of corporate debt Common equity has a pre defined liquidation value 6 Which of the following categories of share capital represents capital that shareholders have agreed to buy but have not yet been paid for Unissued capital Subscribed capital Authorized capital Reserve capital 7 XYZ has 100 000 common shares and issues 50 000 preferred shares in their first round of financing at R10, which is the price at which common shares are trading in the market currently In a subsequent financing round the company issues new shares at R7 50 The adjusted conversion price, using the weighted average anti dilution provision formula, is closest to R7 50 R8 00 R8 50 R10 00 8 Which of the following is not a characteristic of owning common shares Residual claimant Unlimited liability Voting rights Limited life of the security 9 Preferred equity represents the residual ownership of a corporation has a fixed maturity date similar to a bond dividends is paid at the discretion of the board may or may not be cumulative

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Aug 05, 2024

1.A R500 par-value convertible preference share is selling at R520. If the conversion ratio is 20, what is the conversion price? R19 R20 R25 R26

1.A R500 par-value convertible preference share is selling at R520. If the conversion ratio is 20, what is the conversion price?

R19

R20

R25

R26

2.The voting system for common shares that gives minority shareholders the most representation on the board of directors is:

		majority voting
		cumulative voting
		statutory voting
		proxy voting

3.Which of the following statements regarding deferred shares is not correct?

3.A convertible preferred shares is priced at R100, with a conversion ratio of five. If the common shares move to R25 per share, what would the preferred shareholders return be if they converted now?

		-75%
		5%
		25%
		Cannot be determined from the information provided

4.The value of the convertible security can be expressed in terms of the common share into which the security can be converted. It is equal to the conversion ratio times the current market price. This is referred to as the:

		premium over conversion value
		conversion ratio
		conversion price
		conversion value

5.Which one of the following statements related to common equity is correct?

		Corporations are required to pay annual dividends to its shareholders
		Corporations have the right to discontinue paying dividends
		Common equity is a form of corporate debt
		Common equity has a pre-defined liquidation value

6.Which of the following categories of share capital represents capital that shareholders have agreed to buy but have not yet been paid for?

		Unissued capital
		Subscribed capital
		Authorized capital
		Reserve capital

7.XYZ has 100 000 common shares and issues 50 000 preferred shares in their first round of financing at R10, which is the price at which common shares are trading in the market currently. In a subsequent financing round the company issues new shares at R7.50. The adjusted conversion price, using the weighted-average anti-dilution provision formula, is closest to:

		R7.50
		R8.00
		R8.50
		R10.00

8.Which of the following is not a characteristic of owning common shares?

		Residual claimant
		Unlimited liability
		Voting rights
		Limited life of the security

9.Preferred equity:

		represents the residual ownership of a corporation
		has a fixed maturity date similar to a bond
		dividends is paid at the discretion of the board
		may or may not be cumulative